On Holding raised its profit margin outlook for 2026 after a quarter of stronger-than-anticipated sales, highlighting progress in apparel and sneaker categories and rapid expansion in Asian markets.
The Zurich-based sportswear brand reported currency-adjusted first-quarter sales growth of 26.4%, reaching 831.9 million Swiss francs, outperforming the LSEG-compiled analyst consensus of 822.5 million francs. Management said early momentum in apparel and new sneaker launches contributed to the improvement.
Co-CEO Caspar Coppetti said the company is increasingly focused on younger, female consumers and noted that a clothing collection released with brand ambassador Zendaya is performing well. "In terms of the long-term growth, what we’re trying to do with apparel or on the sneaker side, we see early very encouraging signs from that," Coppetti said.
Following the quarter, On increased its 2026 operating profit margin guidance to a range of 19.5% to 20%, up from the prior 18.5% to 19% target. The company also set a gross profit margin goal of at least 64.5% and reaffirmed its objective of at least 23% sales growth for the current year.
Profitability benefited from new product rollouts. Management highlighted the Cloudtilt sneaker - priced between 170 euros and 190 euros - as a top seller across Foot Locker Europe in March. On’s operating profit margin climbed to 21% in the first quarter, up from 16.5% a year earlier.
Regional performance was mixed. Asia-Pacific led growth with a 61.4% increase in sales as the company continues to expand in China and South Korea. The Americas, which account for more than half of On’s revenue, grew 17.1% in the quarter, slowing from a 28.6% gain in the comparable period last year.
Analysts noted both the positive and cautionary signals. Rick Patel of Raymond James said On has managed inflationary cost pressures "very well" and could see upside from potential U.S. tariff refunds. Jefferies analysts observed management’s emphasis on growth in Asia but warned that a deceleration in U.S. growth could undermine the company’s margin outperformance over time.
On’s U.S.-listed shares gave back premarket gains to trade about 4% lower in early session action as market participants focused on the softer U.S. growth trend. The stock is trading near its lowest levels in two years, having declined more than 20% since the start of 2026 amid an energy price shock tied to the Iran war that has weighed on consumer confidence in the U.S. and Europe.
Leadership changes were implemented at the start of May. Co-founders David Allemann and Caspar Coppetti assumed joint chief executive roles on May 1, and Frank Sluis, formerly of supermarket group Ahold Delhaize, joined as chief financial officer.
Summary
On raised its 2026 operating margin target after reporting a currency-adjusted 26.4% rise in first-quarter sales to 831.9 million Swiss francs, driven by apparel traction, successful sneaker launches and strong Asia-Pacific expansion. The company set a gross margin floor of 64.5%, kept a sales-growth target of at least 23% for the year, and reported a Q1 operating margin of 21% versus 16.5% a year earlier. Despite these results, shares fell about 4% in early trading as U.S. growth slowed and broader macro headwinds have pressured sentiment.
Key points
- On reported Q1 sales up 26.4% to 831.9 million Swiss francs, above the analyst average of 822.5 million francs.
- 2026 operating profit margin guidance raised to 19.5%-20%; gross profit margin set at least 64.5%; sales growth target maintained at a minimum of 23% for the year.
- Regional split shows Asia-Pacific as the fastest-growing market (61.4%), while the Americas slowed to 17.1% growth versus 28.6% a year earlier.
Risks and uncertainties
- Slower sales growth in the United States could reduce On’s ability to sustain margin outperformance, affecting the consumer discretionary and retail sectors.
- Share-price weakness - with the stock down more than 20% since the start of 2026 and trading near two-year lows - underscores vulnerability to shifts in consumer confidence in the U.S. and Europe.
- Broader macro pressures from an energy price shock related to the Iran war have already dented consumer confidence, which could continue to weigh on demand in key markets.
Exchange rate reference
Currency note included in company disclosures: $1 = 0.7797 Swiss francs.